The Can-Do Co

question 92

Multiple Choice

The Can-Do Co. is analyzing a proposed project. The company expects to sell 12,000 units,give or take 4%. The expected variable cost per unit is $7 and the expected fixed cost is $36,000. The fixed and variable cost estimates are considered accurate within a plus or minus 6% range. The depreciation expense is $30,000. The tax rate is 34%. The sale price is estimated at $14 a unit,give or take 5%. The company bases its sensitivity analysis on the expected case scenario. What is the contribution margin for a sensitivity analysis using a variable cost per unit of $8?

• A) $3
• B) $4
• C) $5
• D) $6
• E) $7

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Definitions:

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